Australia s New Nickel

Transcription

1 Australia s New Nickel David Singleton Managing Director & CEO January 2013

2 Disclaimer This presentation has been prepared for the purpose of providing general information about Poseidon Nickel Limited ("Poseidon"). It should not be considered as an offer or invitation to subscribe for or purchase any securities in Poseidon or as an inducement to make an offer or invitation with respect to those securities. It is not recommended that any person makes an investment decision in relation to Poseidon in reliance on this presentation material. This presentation contains forecasts and forward looking statements. Such statements are predictions only based on available data which maybe unreliable and is subject to inherent risks and uncertainties which could cause actual values, results, performances or achievements to differ materially from those expressed, implied or projected in this presentation. This overview does not purport to be all-inclusive or to contain all information which its recipients may require in order to make an informed assessment of the projects prospects. Each of Poseidon, its officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission there from. Poseidon accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation. 2

3 Poseidon Nickel Highlights Low risk project, low complexity, 2 mines - Brownfield + Greenfield on existing infrastructure Fast start project. Short construction, commissioning and ramp-up DFS completed, all required approvals in place Strong competitive position. 2 nd quartile cash cost position and low capital intensity Large resource size. Significant resource extension potential Leading Management Team. Andrew Forrest (FMG) worked together for 5 years to bring project to fruition. Poseidon will be the only new nickel sulphide producer ready to meet supply shortfalls in 2014/2015 Commercial in Confidence 3

4 The Nickel Market 4

5 Nickel Sulphides have a capital intensity of less than 50% of laterites and are generally lower in operating cost Sulphides High cost NPI High cost laterites Operating Cost US$/lb Finished Ni For personal use only Commercial in Confidence 5

6 AME Group predict a supply shortage in 2014/2015 leading to sharp commodity price rises From start of 2012 forecast oversupply Now huge under supply in 2015 Deficit represents circa 10% of demand Majority of new nickel production in the world is from high cost laterite ores or nickel pig iron (NPI) in China. This is presenting a supply risk. World needs between 60-80,000 tonnes new nickel p.a. (i.e. 1 or 2, $3Bn - $5Bn nickel laterite plants p.a.) New High Grade (Over 1%) sulphide mines are rare (world average 0.36%*) and leading to a smelter feed shortage and improving payables NPI in China has been the gap filler albeit at high operating costs. However Indonesian supply has been restricted under the new Mining Act and fell by 65% in May and July Laterite nickel plants are invariably late and over cost (Onca Puma,Goro, Ramu, Ambatovy, Ravensthorpe, Murrin, etc) as a result new supply is at risk and realistic plans for new HPAL are rare *Minex Consulting 6

7 CRU predicts a strong outlook for nickel Nickel to rise in relative price CRU expects to see diverging prices trends, some significant rises while others languish Palladium, Tin, Zinc, Uranium, Alumina, Aluminium, Platinum, Lead, Nickel, Met Coke Vanadium, Phosphate DAP, Cobalt Iron Ore, Manganese, Gold, Copper, Coking Coal Potash, Ammonia, Urea, Silver, Sulphuric Acid, Sulphur 7

8 Brook Hunt predicting material supply gap from 2015 for nickel smelters which could lead to concentrate offtake terms improving Smelter supply Gap from 2015 Brook Hunt predict an incentive price from new nickel projects of US$12-US$14 (2012 terms)* Brook Hunt long term nickel price at US$13/lb (2012 terms)* Demand for quality smelter grade concentrate remains high Smelter costs highly leveraged to being fully loaded Poseidon has seen payables rise from circa 65% to over 70% of LME in 5 years 8

9 Windarra Nickel Project 9

10 Unique, Low Risk, High Growth Prospect Nickel Sulphide Project Unique, Low Risk Diversification and Resource Growth Potential Plant Capacity Gold Production Rare new nickel sulphide company worldwide 20 year operating history Mt Windarra produced for Western Mining Corporation and is well understood Low capital intensity 2 nd Quartile cash producer Mining low risk Standard configuration plant producing smelter grade product Two operating mines and gold production New Cerberus orebody demonstrates the potential for further deposits along the 24km belt Discovered in 2008 using modern underground electromagnetic technology Reserve announcement made Similar flotation and processing characteristics to Mt Windarra Resource growth significant and expected to continue 900,000 tonne concentrator plant supporting 700,000 tonne initial throughput Design of plant, camp, power, water, tailings disposal complete Fixed price contract 12 month build programme Ramp up cashflows supported by gold retreatment circuit Retreatment of gold tailings from Lancefield and other local mines Expected output will be 51,000 total ounces in the first 3 years 10

11 Current Status Background Initial DFS completed in February. Past 8 months used to optimise mine plan and production schedule November 2012 DFS review completed by Independent Technical Expert (early December) Moody s & S&P private debt rating underway DFS findings released so far Initial life of circa 10 years Output increase in year 3 from 10,000 (22m lbs) to circa 15,000 tonnes (33m lbs) nickel in concentrate C1 cash cost of US$3.57/lb after co-products State Government approvals received Includes all environmental and construction licences Subject only to final financing (State Agreement requirement) 11

12 Mt Windarra Mine Site includes significant existing infrastructure Main Portal Entrance Vertical Shaft Headframe Core Yard Power Plant Main Offices & Workshops Tailings Ponds & Airstrip $58m of existing infrastructure plus c$80m of investment to date 12

13 Well Understood, Attractive Geological Setting Initial production from Mt Windarra (Brownfield) and Cerberus (Greenfield) mines Mt Windarra Brownfields Underground Mine & 7 Exploration Targets Process Plant Mt Windarra Mine 1.73% Ni For 68,300t Ni metal Woodline Well Oxide 1.38% Ni For 3,676t Ni metal Cerberus Greenfields Mine Cerberus Deposit 1.51% Ni For 68,600t Ni metal South Windarra Open Pit Mine South Windarra Mine 0.98% Ni For 7,500t Ni metal Total Area circa 400km² 13

14 Mt Windarra Brownfield proven mine with many years of further life & expansion potential Mt Windarra mined to 550m with ore body continuity to at least 900m Underground decline & levels Portal entrance Mined & stoped out areas 550m WMC identified Mineralisation requires further drilling Poseidon JORC defined resource 900m 14

15 Cerberus Greenfield mine discovered in 2008 and has led to further potential ore body locations Cerberus is one of the few new discoveries in Australia in recent years Not drill tested Discovered during Poseidon s first regional drilling campaign Underground deposit commencing 64m from surface Mine is high grade, continuous and extends over 1.4km to a known depth of 700m & 400m wide Drilling indicates significant resource expansion likely 110 drill holes for 32km completed ~50% of deposit in Indicated JORC category 15 drill holes for 14km required to complete resource/reserve drilling at depth Mineralisation open in several directions 15

16 Clean concentrate ideal for hungry smelter market Clean concentrate: 82% Nickel Recovery 12% smeltable concentrate Low impurities inc. MgO & Arsenic Offtake offers: Received from multiple parties Right of refusal to BHP on similar terms Multiple export markets and routes Laverton site connected by main roads and 80km from rail Geraldton bulk using Rotobox system Esperance bulka bags Existing Rail & Fremantle by container Tarmac Roads Major Mining Centre Commercial in Confidence 16

17 Poseidon will be a 2 nd Quartile producer C1 Cash Cost (US$/lb) Quartile 1 Quartile 2 Quartile 3 Quartile Poseidon cash cost US$3.57/lb* (circa US$4.94 with smelter adjustment) (5.00) (10.00) (15.00) (20.00) POS Project Life (smelter adj) US$ Cumulative Production (Mlbs) CRU /AME long term average nickel price US$10.50/lb Brook Hunt long term average US$13/lb Production planned output circa 22 million nickel pounds per annum rising to 33 million pounds Chinese nickel pig iron production costs predicted by AME to be US$8.75 to US $9.50/lb *Based on full output. See assumptions book not in presentation Poseidon cash cost is average over life of project 17

18 Poseidon has mirrored its peers with an annualised growth rate of 26% indicating potential to extend current 10 year mine life 26% p.a. 18

19 First Saleable Concentrate by mid-2014 Approvals obtained, DFS complete, independent technical report underway Financing Bridge loan ($8m) Mar 2012 Fully underwritten rights issue ($20m) Jun 2012 Approvals DSD mining and infrastructure approval Nov 2012 Approval subject to financing and offtake H Secure remaining project financing H Feasibility, contracts and pre-award Definitive Feasibility Study complete Feb 2012 Updated Definitive Feasibility Study complete Nov 2012 EPC LSTK Contract in negotiation Dec 2012 Cerberus box cut contract tendered Sep 2012 Cerberus contract tendered Dec 2012 Independent Technical Expert report draft completed Dec 2012 Project development Acquired Windarra Nickel Project 2006 Cerberus discovery 2008 Dewatering, refurbish decline and infra. H Increase Mt Windarra reserve H Plant construction complete H First saleable concentrate H

20 Poseidon Nickel Overview Description ASX-listed nickel development and production company that owns 100% of the Windarra Nickel Project a large, high grade nickel asset Poseidon Board / Management Andrew Forrest Chairman David Singleton CEO Rob Dennis COO Share price $0.125 (14 Nov 12) Shares 407.7m Market cap $71.2m (USD 75m) Michael Rodriguez Group Technology Manager Neil Hutchison General Manager Geology Gareth Jones Financial Controller Capital Resources / Reserves Cash A$17.5m Convertible notes 34c (avg.) Unsecured loan (A.Forrest) A$8m 144,400 tonnes Ni metal resources 15,880 tonnes Ni metal reserves Shareholders Andrew Forrest 31.89% Target production Project life 10+ years Expected capex c.10,000 tonnes Ni p.a. 15,000 tonnes c.a$210m pre-production capital Other 57.62% Jefferies 4.91% Board & Management 5.58% 20

21 Poseidon Nickel Highlights Low risk project, low complexity, 2 mines - Brownfield + Greenfield on existing infrastructure Fast start project. Short construction, commissioning and ramp-up DFS completed, all required approvals in place Strong competitive position. 2 nd quartile cash cost position and low capital intensity Large resource size. Significant resource extension potential Leading Management Team. Andrew Forrest (FMG) worked together for 5 years to bring project to fruition. Poseidon will be the only new nickel sulphide producer ready to meet supply shortfalls in 2014/

22 Resource Table Cerberus Nickel Project Reserve Category - Nickel Sulphides Probable Tonnes Ni% Grade Ni Metal t Total 1,221, ,880 Windarra Nickel Project Sulphides Cut Off Grade Tonnes Resource Category - Nickel Sulphides Indicated Inferred TOTAL Ni% Grade Ni Metal t Tonnes Ni% Grade Ni Metal t Tonnes Ni% Grade Ni Metal t Mt Windarra 0.75% 974, ,400 2,977, ,900 3,951, ,300 South Windarra 0.80% 772, , , ,500 Cerberus 0.75% 2,773, ,600 1,778, ,000 4,551, ,600 Total Sulphide 4,519, ,500 4,755, ,900 9,274, ,400 22

23 Resource Table (cont d) Windarra Gold Tailings Project Total Gold Tailings Resource Category - Gold Tailings Indicated Tonnes Grade (g/t) Au (oz) 10,993, ,500 Windarra Nickel Tailings & Oxide Project Cut Off Grade Tonnes Resource Category Nickel Oxide & Tailings Indicated Inferred TOTAL Ni% Grade Ni Metal t Tonnes Ni% Grade Ni Metal t Tonnes Ni% Grade Ni Metal t Woodline Well 0.50% 344, , , ,300 Sth Windarra Dumps Central Tailings Dam 0.00% 2,976, ,200 2,976, , % 9,602, ,600 9,602, ,600 Total Oxide 12,578, , , ,300 12,922, ,100 Note: The information in this report relates to Exploration Results, Mineral Resources and Ore Reserves based on information compiled by Mr N Hutchison, General Manager of Geology at Poseidon Nickel, who is a Member of The Australian Institute of Geoscientists, Mr I Glacken who is a Fellow of the Australasian Institute of Mining and Metallurgy as well as a full time employee of Optiro Pty Ltd and Mr D Grubic, Technical Services Manager at Rock Team Pty Ltd. Mr Hutchison and Mr Glacken have sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Grubic is a full time employee of Rock Team Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australian Code for Reporting Ore Reserves. Mr Hutchison, Mr Glacken and Mr Grubic have consented to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Australian Securities Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release. 23